HMRC plea to tackle online VAT fraud

According to government sources HMRC are asking online market places to sign an “agreement” to keep their users the right side of the law. In a recent announcement HMRC said:

“… the agreement will help online market place platforms meet their responsibility to ensure their sellers understand the tax rules, and prevent fraud taking place on their watch.”

We assume that the intention is to discourage users setting up shop and avoiding their VAT dues by avoiding registration.

An online marketplace is defined in VAT legislation as a website, or any other means by which information is made available over the internet, through which persons other than the operator can offer goods for sale (whether the operator also does so).

Since the 25 April 2018, HMRC is asking all online marketplaces operating in the UK to sign an agreement to help tackle online VAT fraud and errors taking place on their platforms.

Online marketplaces have transformed the way people shop and helped millions of businesses to sell their products and services.

As far as HMRC are concerned, the platforms have a responsibility to ensure their sellers understand the tax rules and prevent fraud from happening on their watch.

The agreement asks online marketplaces to commit to:

educating online sellers from the UK and abroad about their VAT obligations in the UK either via their own help and support or by directing them to HMRC’s GOV.UK guidance;

responding swiftly when notified by HMRC that sellers are not playing by the VAT rules, and setting up a system to take appropriate action; and

finding a suitable and lawful way to provide HMRC with information about their sellers, when requested.

The last bullet point is interesting. We assume that “lawful” alludes to the data protection rules as eBay, and the like, would be required to share the personal data of their customers to comply? Will the market places be obliged to “report” their customers in some sort of de facto Money Laundering Reporting obligation?

Can’t help wondering if HMRC are shifting their workload, their eyes and ears, elsewhere?

Be interesting to see if the market place organisations will comply. Apparently, the only down side to not complying is that HMRC will not publish their name on a list of platforms that have signed the agreement.

However, about 27,550 applications to register for VAT from overseas online retail businesses have been made since HMRC started to become active in dealing with this issue. This compares with about 1,650 for 2015.

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